Cuba's financial situation; [News items];

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42 HASKINS & SELLS May
Cuba's Financial Situation
By C. M . CLARK, Acting Manager, Havana Office
GE N E R A L post-war conditions aug­mented
by the reaction from an un­bridled
speculation in sugar and an almost
total prostration of the Port of Havana
have brought upon Cuba its financial
crisis. Delayed by the moratorium but
not averted, the latest development has
been the closing of the doors of what had
been Cuba's most important banking in­stitution.
Much greater panic would,
doubtless, have resulted had it not been
for the American and Canadian banks
with the reserves of their parent organiza­tions
behind them.
Dating as far back as the year 1918, the
Port of Havana has been subjected to
serious strikes interfering with the delivery
of goods. During the closing months of
the war, it became extremely difficult for
merchants in Havana to obtain any goods.
Orders were not being filled and those
goods which did arrive were so involved in
the dock congestion as to be almost unob­tainable.
One of the customs regulations
of the Port refused the clearance of a ship­ment
except in total. If part of a ship­ment
were missing, nothing could be
cleared. Strenuous objection to this prac­tice
did finally bring about the establish­ment
of the "quedan," which is a deposit
or guarantee covering all possible charges
against the missing portion of the ship­ment.
Even this to-day is applicable only
to certain classes of merchandise.
Havana merchants placed large orders
in the hope that some of the goods would
get through. In some instances goods
were ordered shipped to Matanzas to be
brought to Havana by truck. Price meant
little so long as the goods were to be had.
Then there came the time when the
overstocking of merchandise, particularly
in the United States, was realized, and
Cuban orders, shipment of which the mer­chants
little expected, were filled promptly.
In the summer of 1920, the Port of Ha­vana
was completely paralyzed with ship
after ship lying at anchor waiting to dis­charge
its cargo. What little work the
dock laborers did was handicapped by
customs regulations. Goods were trans­ferred
to wharves and lighters until such
capacity was exhausted. Any breakage in
shipments in the transfer meant refusal of
clearance.
Millions of dollars' worth of goods were
thus piled up in the Havana congestion
when the storm began to break in the fall
of 1920. Merchants who had obtained
letters of credit at banks became power­less
to take up their shipping documents
and banks found themselves with ship­ments
to be disposed of. Sight drafts with
shipping documents attached were not ac­cepted
and accumulated in large numbers
awaiting advice from shippers.
A campaign started by the Rotary Club
of Havana when its members donned over­alls
and went to the docks to work was
finally successful in centering opinion upon
the dock congestion. A commission was
sent from the United States to assist. A
new regime was established and merchants
were told that they must remove their
goods immediately upon notice. An old
abandoned cemetery and other vacant
properties were obtained and enclosed,
and non-perishable goods uncalled for by
consignees were deposited there and stored
under tarpaulins or such other protection
as could be erected.
The docks were cleared but the credit
situation will take many months to work
itself out. Vast quantities of merchandise
are now on hand in Cuba bought at tre­mendously
high prices and surcharged with